Demand based pricing, Marketing Management

Assignment Help:

Demand Based Pricing: Described methods belong to the category of demand / market based pricing:-

1. What the Traffic can Bear' Pricing

2. Skimming Pricing

3. Penetration Pricing

  • What the Traffic can Bear' Pricing: The seller takes the maximum price that the customers are eager to pay for the product under the given circumstances. This technique is used more by retail traders and than by manufacturing firms. This method brings big profits in the short term objective. But in the long run it is not a safe concept; chances of errors in judgment are very high.
  • Skimming Pricing:This method aims at high profits & high price in the early stage of marketing the product. It gainfully taps the opportunity for selling at high prices to those segments of the market, which do not bother much regarding the price. This particular method is very useful in the pricing of new products, especially those that have a luxury or specialty elements.
  • Penetration Pricing: Penetration pricing seeks to gain greater market penetration throughout relatively low price. This method is also helpful in pricing of new products under definite circumstances. For instance :when the new product is capable of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive segment, the firm can select the penetration pricing and make large size sales at a reasonable price before competitors enter the market having a similar product. Penetration pricing in such type of cases will help the firm have a good coverage of the market and keep competition out for some time.

The price elasticity of demand is taken into account in all of the demand based pricing methods, indirectly or directly. Price elasticity of demand refers to the relative sensitivity of demand for a product to changes in its value in other words how significantly the sales of the product are affected when price is changed. If decrease or increase in the price of the product results in significant increase or decrease the product is said to be price elastic conversely, if price change does not considerably affect the sales volume, a product is called to be price inelastic.


Related Discussions:- Demand based pricing

What is financing in functions of marketing, What is financing in functions...

What is financing in functions facilitating exchange? Financing: Financing and marketing both functions of a business are interlinked along with each other. The department

Affected factors of strategies human resource investment, How many factors ...

How many factors are affected of strategies human resource investment decision? There are numerous factors which considered of strategies human resource investment decision. Su

What is available market, A vailable Market This may be refers to ...

A vailable Market This may be refers to the combination of those clients who have an interest in a particular product or service, access to it, and the funds to pay for it

Explain about the demographic trends, Explain about the Demographic Trends....

Explain about the Demographic Trends. Demographic Trends: The changes within demography have significant implications for human resource management. A main change compris

The pythagorean theorem, Write an equation you could use to find the length...

Write an equation you could use to find the length of the missing side of each right triangle. Then find the missing length. Round to the nearest tenth if neccessary...

Solely to increase the profits, does the marketing exits solely to increase...

does the marketing exits solely to increase the profits

What are views of management philosophers about marketing, What are views o...

What are views of management philosophers about marketing? Many management philosophers consider marketing to be the most crucial function of a business. Into a business organi

Marketing, Does marketing exisit solely to increase profit?

Does marketing exisit solely to increase profit?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd